UNDP INTERNAL DOCUMENT – NOT FOR CIRCULATION
GUIDELINES FORPRIVATE SECTOR PARTNER RISK ASSESSMENTTOOL
Contents
1.Introduction
2.Collate background information
3.STEP 1: Assess the private sector entity against UNDP exclusionary criteria
a)EXCLUSIONARY CRITERIA 1, 2, 3: Weapons, armaments, their components, and replica weapons
b)EXCLUSIONARY CRITERIA 4: Tobacco or tobacco products
c)EXCLUSIONARY CRITERIA 5: UN sanctions, conventions, treaties, and resolutions, ineligibility and sanctions lists
d)EXCLUSIONARY CRITERIA 6: Pornography
e)EXCLUSIONARY CRITERIA 7: Substances subject to international bans or phase-outs and wildlife or products
f)EXCLUSIONARY CRITERIA 8: Gambling
g)EXCLUSIONARY CRITERIA 9, 10, 11: Human rights violations, forced or compulsory labor and child labor
4.STEP 2: Research possible controversies
5.STEP 3: Assess the private sector entity commitment to ESG and the partnership risks and benefits
6.STEP 4: Make a decision
7.STEP 5: Prepare a risk log, monitoring plan and communication materials
Annex 1: High-risk sectors
Annex 2: Exclusionary criteria
Annex 3: Guidance on how to gather information and useful sources
Annex 4: The ILO Conventions on child labor
Annex 5: Guiding principles on business and human rights
Annex 6: Conventions and applications of banned substances
Annex 7: UN Global Compact Principles
Annex 8: Controversies and example cases
Annex 9: Monitoring plan
1.Introduction
UNDP’s Strategic Plan 2014-2017 highlights the importance to substantially expand and improve the scope, quality and outcome of our collaboration with the private sector, as an important factor in supporting UNDP’s overall vision “to help countries achieve the simultaneous eradication of poverty and significant reduction of inequalities and exclusion”.
The Policy on Due Diligence and Partnerships with the Private Sector (2013), complemented by the Risk Assessment Tool and this Risk Assessment Tool Guideline, aims to strengthen the risk management capacity of UNDP to work with the private sector.[1]When UNDP staff is considering entering into a partnership with the private sector, the Policy, Risk Assessment Tool and this Guideline should be read in conjunction with the Programme and Operations Policies and Procedures (POPP) on Private Sector Partnerships.
The Risk Assessment Tool and this Guideline are organized in the following sections:
- Collate background information.
- Step 1: Assess the private sector entity against UNDP exclusionary criteria.
- Step 2: Research potential controversies.
- Step 3: Assess the private sector entitycommitment to ESG and the partnership risks and benefits.
- Step 4: Make a decision.
- Step 5: Prepare risk log, monitoring plan and communication materials.
The steps of the risk assessment, tasks to be performed under each step and the outcome are described in figure 1 and the details of each are gone through one by one in the following sections of this document.
Please also remember that for private sector partnerships that involve project funding, the project must also be reviewed to ensure compliance with UNDP’s Social and Environmental Standards, including through UNDP’s Social and Environmental Screening Procedure (
Figure 1: Steps of the assessment
Who is the ‘’private sector’’ under the Policy?
The Policy defines the private sector as:
a)For-profit and commercial enterprises of any size
b)Corporate foundations[2]
c)Business associations, coalitions and alliances (including e.g. chambers of commerce, employers’ associations, cooperatives, industry and cross-industry initiatives where the participants are for-profit enterprises). These organizations will be assessed on their own merits, rather than on the merits of its members[3].
d)State owned enterprises.
Please note that sporadic, non-commercial-income-generating activities on the part of individuals are not considered part of the private sector.
In what situations should the risk assessment be done?
All these private sector entities listed above will need to go through the risk assessment before UNDP can enter into a partnership[4] with them. Therisk assessment should be completed for any potential partnership with a private sector entity[5]. This includes any partnerships where UNDP has a contractual agreement with the private sector entity (e.g. MoU, CSA or Pro-Bono Agreement to receive financial or non-financial or in-kind support, cause-related marketing etc.) or programmatic collaboration. The assessment needs to be done in all contexts, including crisis and post-crisis settings.In crisis settings the HQ can provide more support to ensure a quick assessment process. If the private sector entity is a general participant in a UNDP event, i.e. not a partner, no risk assessment needs to be done. For major event panelists it is recommended that the exclusionary criteria are checked.
The assessment is designed mainly for companies but it should be followed as closely as possible in the case of corporate foundations, associations, coalitions and alliances and state owned enterprises. In these cases, the Risk Assessment Tool can be used with some flexibility where applicable. For corporate foundations, it should be well understood how the foundation is connected to the company itself and it should look at the company and the foundation collectively. Importantly, any potential private sector partner, no matter whether it is a company or another type of private sector entity, should satisfy the principles outlined in the Policy on Due Diligence and Partnerships with the Private Sector (2013).
In case of partnerships involving more than one partner, one template per potential partner should be filled in.
What kinds of partners is UNDP looking for?
As defined in the Policy, UNDP will seek to partner with private sector firms that are committed to core UN values and UN causes, and that are not involved in commercial or other activities that are incompatible with UNDP’s values, mission and brand.
Who conducts the risk assessment?
The Project Manager in the Initiating Unit ensures that the risk assessment is done in an appropriate manner. UNDPResults and Quality Programming Team in Development Impact Group in BPPS provides support in the process, analysis and decision-making and can provide information especially about big multinational and international companies. Support can also be requested from the Regional Bureaus.
Ultimate accountability of ensuring that the risk assessment is appropriately done lies with,depending on the case,either RR, Regional Director, BPPS Director, or appropriately designated person. See more details in the Step4: Make a decision. Before signing a partnership agreement, they will check the risk assessment, propose whether or not to engage and under which conditions and sign it.
When to conduct the risk assessment?
It is important to undertake the due diligence as early on in the process as possible. A first minimum-level screening against the exclusionary criteria (Step 1) should be undertaken as early as possible. Assuming the potential partner clears this screening, the full due diligence should be undertaken once the partnership negotiations have advanced to the stage where there is a clear indication of interest to collaborate on both sides and the programmatic content for the partnership has been broadly defined and articulated.
For some companies, the risk assessment may have been already done before. As a rule, an assessment that is older than two years would need to be updated. If the assessment is more recent, only the steps on exclusionary criteria and controversies need to be updated. Screening done by other UN organizations within the past two years can also be used as a basis and the initiating unit would only undertake complementary due diligence on criteria that may not have been covered.
What about multinationals?
The assessment needs to cover the private sector entity’s activities also in other countries, not only the country where the partnership would take place.
What else to consider?
It is essential to keep in mind throughout this process that the assessment of the benefits and risks that arise from the nature of the collaboration with the private sector are not the same as the overall project risk. This overall project risk comprises environmental, financial, organizational, political, operational, regulatory and strategic risks, and will also need to be assessed in the normal way as for any UNDP project and recorded in the Project Risk Log. The output of this Risk Assessment Tool may also provide risks that need to be recorded in the Project RiskLog and managed alongside the other risks that have been identified.
2.Collate background information
What is looked at in this step?
This section provides thegeneral information about the private sector entity: its sector, operations, ownership and subsidiaries[6], geographic presence, size and analysis the reliability of the information sources used to fill in the tool. It also looks at previous partnerships between the private sector entity and UN Agencies and helps to decide the required level of due diligence.
How to collect information?
Collecting the background information can happen through various channels. The initiating unit should contact the Results and Quality Programming Team in Development Impact Group in BPPS to find out if any reports are available from external service providers (see list of companies here) or if a risk assessment has been or is currently being done (find database here). Often a lot of the information is readily available for big multinational companies. For smaller private sector enttites (e.g. SMEs)research usually needs to be done using other sources, such as internet, news articles and company reports. Research may be performed by the initiating unit or the initiating unit may hire a third-party consultant to undertake the research.Annex 3: Guidance on How to Gather Information provides useful search tips and suggests different sources.
The initiating unit should also collect information from the private sector entity itself. This is often a simple and effective approach. This can be done through a structured interview with the private sector entity representative or the private sector entity can fill in the‘’Partner Template’’ (link).Inputs sourced from the private sector entity should be verified, e.g. the private sector entity could provide a copy of the policies and certifications.
There may be information available within the organization or other UN Agencies. It is important that the initiating unit determine whether UNDP, or any other member of the UN family, currently has, or has previously had, a relationship with the private sector entity. The initiating unit should search on the UNDP private sector database, search internet and contact the Results and Quality Programming Team in Development Impact Group in BPPS and the relevant UN(DP) unit concerned in a previous engagement to ask for further details about the collaboration. This may save time on additional research and may also allow information to be found out that may have been too sensitive to log on the database. However, new issues may arise at any time and the initiating unit will still have to ensure that the information is up to date.
How to assess reliability of the information?
Reliability of the information should be judged when filling in the RAT. It is important to document the sources carefully for further analysis. If many reliable sources refer to the same issue, this can indicate about the importance of the issue nationally, regionally or globally.
How to document information of sensitive nature?
When recording data of a sensitive nature, care should be taken to write notes in a way that would be acceptable if read by a representative of the private sector entity, even if there is no intention of sharing the record with that private sector entity. This is to avoid reputational damage or even legal redress if these notes were inadvertently to be put into the public domain, or unsubstantiated allegations were found to be on record. Where possible, use factual and neutral expressions such as “it is alleged…” or “it has been perceived that…” However, notes still need to describe findings clearly, so that the facts are stated and documented accurately and kept in UNDP records for the use of other UNDP staff in the future. For ease of reference it is good to hyperlink the online sources.
Which parts of the risk assessment should be completed?
The type of partnership[7] and the sector defines how rigorous background check needs to be done. For those partnerships that do not involve a close engagement (e.g. an advocacy or policy dialogue event or financial contribution under US$100,000) andin which the private sector entity is from a low-risk sector, a reduced level of due diligence may be applied. It will be enough to assess the private sector entity only against UNDP’s exclusionary criteria and check if the private sector entity is involved in any controversies (Step 1, 2). If there are no issues with these the assessor may move to the Step 4 to recommend a certain decision.However, if the partnership is on advocacy but includes a financial contribution above US$100,000 from the private sector entity, the full assessment needs to be done. Also, for programmatic engagement or if theprivate sector entity is from a high-risk sector[8] the full risk assessment is always needed (Steps 1, 2, 3, 4 and 5). For more information on high-risk sectors, please refer toAnnex 1: High-Risk Sectors.
3.STEP 1: Assess the private sector entity against UNDP exclusionary criteria
What is looked at in this step?
UNDP has defined a set of exclusionary criteria outlining those business practices considered unacceptable to the organization.This list includes issues widely viewed as being unacceptable, such as human right violations. However, it also includes issues or sectors that might be considered by sections of the general public as legitimate (e.g. production of defense equipment), but from which UNDP has decided to refrain as they are not in line with the organization’s values.
For all partnerships, always check the exclusionary criteria!
The application of the exclusionary criteria will determine to a large extent the perception the general public has of UNDP. All partnerships, no matter how limited in nature they are, should therefore bescreened against these criteria.Annex 2: Exclusionary Criteria contains UNDP’s exclusionary criteria and provides guidance on whether or not to engage in cases where the private sector entity itself, its subsidiaries, parent companies and distributors or suppliers are engaged in activities that fall under exclusionary criteria. The table provides the threshold limits within which the partnership can still be considered possible. These principles reflect also policies of many other UN Agencies. It is not always easy to find all this information especially for the supply chain, however, the best information available should be used to check if the private sector entity is associated with any of these issues through its suppliers. It is not realistic to analyze the full supply chain, however it should be checked if the private sector entity has policies in place to avoid its suppliers to be engaged in exclusionary criteria. In addition, you should screen for any potential supplier related significant controversies related to the exclusionary criteria that the private sector entity is associated with.
What is the timeframe that any possible issues should be documented for?
Any major controversies should be documented from the past five to ten years depending on the severity of the issue. It should be looked atif the issues are recurring, frequent, how close in time have they happened, how the private sector entity has addressed any possible controversiesand evaluated if the matter has been concluded and handled in an appropriate manner. A sector peer comparison may also be helpful to define if the handling has been appropriate. If in doubt how to determine this, you can consult the HQResults and Quality Programming Team in Development Impact Group in BPPS. Some examples can be found in the attachmentAnnex 8: Controversies and example cases.
How are the answers structured in this step?
The response options are organized in two columns, the response options on the right hand side (evidence within or above threshold and not known) indicate that there are some issues. The response option on the left (no evidence) indicates that everything is ok and there are no major concerns with the private sector entity. This logic applies throughout the tool, which should help the people who review the risk assessment to easily spot if there are issues they should pay attention to.
a)EXCLUSIONARY CRITERIA 1, 2, 3: Weapons, armaments, their components, and replica weapons
UNDP does not engage with companies involved in controversial weapons
UNDP will not under any circumstances engage with companies involved in the manufacture, sale or distribution of controversial weapons or their components, i.e. nuclear weapons, biological weapons, chemical weapons, non-detectable fragments, blinding laser weapons, anti-personnel mines and booby traps, cluster bombs, incendiary weapons and depleted uranium ammunition[9]. This rule also excludes companies whose subsidiaries, parent company and/or supply chain have any engagement in these areas.